Four of the country’s top-performing government financial institutions (GFIs) on Tuesday rallied behind a proposed bill creating a super government-owned fund and committed to raise the start-up capital for the project.
Speaker Martin Romualdez filed House Bill (HB) 6398 calling for the establishment of the Maharlika Wealth Fund (MWF) patterned after the Sovereign Wealth Fund (SWF) of other countries “to maximize the profitability of investible government assets for the benefit of all Filipinos.
During Tuesday’s hearing of the House Committee on Banks and Financial Intermediaries on the proposed measure, representatives from the Government Service Insurance System (GSIS), the Social Security System (SSS), the Land Bank of the Philippines (Land Bank), and the Development Bank of the Philippines (DBP) unanimously backed the creation of the MWF.
“We are very supportive of this bill and we have committed P125 billion to be able to jumpstart the incorporation and help set in motion the principles of the sovereign wealth fund,” said GSIS president and general manager Jose Veloso.
DBP president Emmanuel Herbosa, SSS president and chief executive officer (CEO) Michael Regino, and Land Bank of the Philippines president and CEO Cecilia Borromeo, likewise informed the committee that they stand four-square behind the proposed MWF.
Under the bill, the four GFIs—which shall be known as the founding GFIs—are mandated to invest equity with a combined total of P250 billion to start up the fund.
GSIS will provide an initial investment of P125 billion, P50 billion for both SSS and LBP, and P25 billion from the DBP.
The Speaker earlier explained that the creation of MWF will provide an “opportunity to ensure their respective funds’ optimal asset allocation as well as ensure that resources are efficiently channeled to investments that will provide the most value not only to the participating GFIs but also to the country.”
In calling for the approval of the measure, Marikina City Rep. Stella Luz Quimbo said the MWF—managed professionally and guided by the principles of good governance, transparency, and accountability—will yield the best return for the investment, providing the government with additional resources to address the country’s pressing problems.
For his part, Tingog party-list Rep. Jude Acidre noted that viewed in the context of the recentfinancial crisis, the Russia-Ukraine conflict, and the pandemic, the impact of sovereign wealth fund employed by many economies have been notably positive.
“This representation earnestly asks this committee for the speedy passage of this bill,” Acidre added.
House Committee on Ways and Means Committee chair and Albay Rep. Joey Salceda said his panel has no objections to the provisions on tax exemption under HB 6398 as long as they would result to the benefit of the MWF.
In filing the bill, Romualdez said it would help achieve the objectives of the Agenda for Prosperity and the eight-point socioeconomic roadmap of President Ferdinand Marcos Jr.
The Speaker cited Singapore and Indonesia as countries that have successfully used their sovereign wealth funds.
He said Singapore’s SWFs provide the financial means for the city-state “to manage its foreign reserves, defend itself and protect its sovereignty without compromising its domestic program, and augment its land-limited economic space with global investments.”
In the case of Indonesia, Romualdez said it has attracted foreign investors to jointly capitalize its SWF to bring in much-needed investments in such sectors as transportation, including airports, supply chains, logistics, digital infrastructure, the green economy, healthcare services, the financial sector, technology, and tourism, ultimately propelling the country’s growth.
“As the Philippines secures its place not only as the Rising Star of Asia but as a real economic leader in the Asia Pacific, the creation of the MWF becomes imperative,” Romualdez had said.
To ensure transparency and accountability, he said the MWF would adhere to the Santiago Principles.
These are the 24 generally accepted principles and practices agreed to in October 2008 in Santiago, Chile, among countries with SWFs, investment recipient countries, and international organizations.
The stakeholders committed to observe that SWFs will comply with all applicable regulatory and disclosure requirements in countries in which SWFs invest and that the SWFs will have in place a transparent and sound governance structure that provides adequate operational controls, risk management, and accountability, among other commitments.
Under the bill, the envisioned MWF would have a governing board, composed of nominees of the contributing GFIs and two independent directors, in charge of managing the fund.
Co-authors of the measure were House Majority Leader Manuel Jose Dalipe, senior Deputy Majority Leader Ferdinand Alexander Marcos, Tingog party-list Reps. Yedda Marie Romualdez and Acidre, and Quimbo.